The US dollar has been positive against the Canadian dollar during the trading session on Friday, testing the crucial 1.40 level. The 1.140 level is an important level to pay close attention to, as it is a large, round, psychologically significant figure and an area that a lot of people have watched multiple times in the past.
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In fact, I would suggest that there is a bit of a range here between the 1.3950 level and the 1.40 level. With this, I think you have to be cautious because we are in a situation where traders are just simply waiting to see whether or not we can truly break out.
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A true breakout would be above the 1.40 level on the daily chart. If we turn around and drop from here, the 1.39 level is the next potential buying opportunity. Keep in mind that the oil markets are not helping the Canadian dollar at the moment, although in this pair, I think it is a lot less influential because the United States produces over 13 million barrels a day and almost 14 million barrels of oil every single day.
With that, I think the market continues to be a very choppy and volatile environment. And if we get more of a risk appetite-based move, then it's going to probably follow what happens with the US dollar elsewhere. The Canadian economy is struggling a bit, and of course, the US economy looks very strong.
What I would say from a technical analysis standpoint is that the 50-day EMA is just now crossing above the 200-day EMA, kicking off the so-called Golden Cross. That could have longer-term traders very interested if we do, in fact, rally.
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